Australia triumphed by 245 runs at Newlands with a little more than four overs remaining to win the series 2-1 as Smith signed-off on a low note.
His decision to retire shocked a nation but Smith admitted he had been toying with the idea since former coach Gary Kirsten announced last May he would be leaving the team.
“When Gary left, that was when the process started for me,” Smith, the most successful captain in test history with a record 53 wins, told reporters.
“The thought entered my mind then and it has taken me a period of time to try and understand and process that. I still feel I could perform over the next period of time but I have peace that this is the right time to go.
“When I told the team a couple of nights ago it was a really tough night, I didn’t manage to get too many words out. The hardest part has been saying goodbye to the team, for so long the Proteas environment has been my family.
“It took a while to have the courage to make the decision. At 33 people say you have a lot of years left but it has felt like the time is right for me.
“I realised that this (Newlands) is the place where I wanted to finish my career. I didn’t want to hang on and finish at a place where it didn’t feel right.”
Smith was first selected for South Africa aged 21 and within a year was made captain of the team, a job he held for 11 years.
He built his career by scoring runs “ugly”, but with over 17,000 amassed in all formats of international cricket, he proved the early doubters wrong.
“When I started my professional career all I use to hear was about my bad stance and my grip and how I needed to change things, so to be sitting here 17,000 runs later is hopefully an example to other people that if you are less talented, there is a lot you can still achieve in life,” he added.
“I have always been a determined player, I don’t think I have ever been a player that has had the best technique but I have always been able to find a way and left everything out on the field.”
His career highlights have come in England and Australia, two of the traditionally toughest places for South Africa to get results.
“There have been so many wonderful victories around the world, winning in England and Australia would be the highlights … our record away from home has been something I am really proud of,” he said.
“On a personal level, the 154 I scored to win the series in England (in 2008), that’s the innings that always sticks out in my mind. And the hundred in Perth (in 2008) to help set things up when we were chasing over 400 and won.”
And the regrets?
“To have won a World Cup, that would have been ticking all the boxes,” he said.
(Reporting by Nick Said; editing by Pritha Sarkar)